In one of the videos in Youtube which explained about stock buy backs, it was told that companies can achieve higher Return on Assets by doing stock buy backs. The explanation went like this :- When a company does a share buy back, its assets decrease whereas earnings remain constant. Since RoA is (Earnings / Assets) * 100%, RoA gets boosted.
What I do not understand is the fact that how the assets decrease? Company is using the cash to be converted into its own stocks, which is also an asset. If the share price goes up then assets increase else it goes down. Then how can we claim that assets definitely decrease when a share buy back is done?